How to Read Letters in Annual Reports

To help us put things into context, I want to share a story of a friend of mine, Bruce. Bruce is a brilliant entrepreneur and businessman. One of his cash producing business is a chain of retail shops selling mainly earrings. The story in summary is that Bruce left his job as an auditor at one of the Big 4 Audit firms and started his chain of shops, all starting …

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The No.1 Secret to Value Investing is…

Dear Friends, I hope you are mentally prepared to receive the No.1 secret to Value Investing.   If you have watched Kung Fu Panda movie, there is this secret scroll, but the cool news is that the Secret is that…. there is No Secret. And please don’t quote me on this, you can choose to quote someone who is so established, Legendary investor Seth Klarman. Seth Klarman says, ” The …

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The Greatest Investment Checklist in the World!

Warren Buffett, the greatest investor is said to be highly influenced by this one man other than Benjamin Graham and Philip Fisher: This man is none other than his partner, Charlie Munger. In the book, Poor Charlie’s Almanack, the investing principles are highlighted. We would like to share it with you below: 1. Risk – All investment evaluations should begin by measuring risk, especially reputational. Incorporate an appropriate margin of safety …

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Why Inflation needs to be factored when assessing the Value of a Business

There are some fabulous stocks in the stock market that is very stable, but is no longer growing. So can we still assess the value? Let me give you an example. Say we are assessing a chicken rice business in a mature estate in Singapore. The chicken rice shop has regular customers in that estate so its net revenue (or sales of food) is very steady, but there is no …

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When a Company Buys back Shares (Repurchase)…

shares-purchase

In this post, we will explore into a earnings management strategy that some businesses adopt. When a business earns profit, there are 3 main things it can do to the amount of cash it made. 1. Give out as dividends 2. Keep as retained earnings 3. Buy back shares     Lets look into the effect of each of them for shareholders and see when each of them makes sense. …

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The 4 steps of Stock Investing

The 4 Steps of Stock Investing Whenever friends ask me what stocks to buy? I will answer that if I tell them “what stocks to buy” is only 1 step out of the 4 steps of the investing process and it will not be complete unless I show them the entire 4 steps. Lets take a look at the 4 steps A-B-C-D stock investment process:   A – Assess: Going …

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Understanding Financial Health of a Company

Understanding Financial Health of a Company In dissecting a business to check its “health”, we make use of the 3 Financial Statements: Balance Sheet Income Statement Cash Flow   In this post, we will look into the balance sheet:   The Balance Sheet The Balance Sheet is a financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give investors an idea as …

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The 4 Question Check List

The 4 Question Check List There is some probing questions you can ask when faced with a company you suspect has a competitive advantage   Q1: What is the Value the business is providing? Lets take for example we talk about KFC. The value is yummy chicken. We then move on to the next question.   Q2: Can you get it else where? The answer is yes to this question. …

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